Jefferies Downgrades Molina Healthcare (MOH) to Underperform, High Execution Risk

September 18, 2012 7:02 AM EDT
Get Alerts MOH Hot Sheet
Price: $57.53 -3.6%

Rating Summary:
    7 Buy, 8 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 24 | Down: 17 | New: 14
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Jefferies downgraded Molina Healthcare (NYSE: MOH) from Hold to Underperform with a price target of $19.00 (from $20.00).

"Similar to HNT, MOH is fighting battles on several fronts. For MOH, EPS is likely to be negative in '12. This isn't a call on Wednesday's Investor Day, but rather on the high execution risk: in TX Medicaid (109% MLR), CA (new ABD lives running at 95% MLR), and WI (121% MLR). MOH's stock has surged 5+ points (31%) since disclosing the Hidalgo, TX issue in early June, and is trading at a rich 17.4x '13E EPS. Yes, '13 EPS consensus still doesn't reflect full earnings power, but it still may be too high. Additionally, we see a take-out above this valuation - with the execution hurdles ahead
of MOH - as a low probability."

FY12 EPS goes down from $1.66 to $1.33.

For an analyst ratings summary and ratings history on Molina Healthcare click here. For more ratings news on Molina Healthcare click here.

Shares of Molina Healthcare closed at $23.14 yesterday.

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